Value-added energy drives North Dakota's lignite coal industry

The state that is becoming known for value-added agricultural products has also increased the value of lignite through energy generating plants. North Dakota is the only state with a commercial-size coal gasification plant, which supplies natural gas to other Midwestern states for industrial and home heating use and produces byproducts such as fertilizer. Coal gasification uses about 20 percent of the state's lignite, while the remainder is used in generating electricity.

In an annual study of the impact of the lignite industry on the state's economy, North Dakota State University (NDSU) economists report that two measures can be used to show the importance of the lignite industry to North Dakota's economy: sales for final demand and business activity. "When lignite energy sales for final demand for 1994 ($821.2 million) were compared with the total economic base (sales for final demand or exports) for North Dakota for 1994, the last year the data were available ($9,841.0 million), they comprised 8.3 percent of the state's total."

"The lignite industry is a real pillar of the economy," says Larry Leistritz, professor of agricultural economics at NDSU and one of the report's authors. "Although the industry doesn't employ great numbers of people, towns like Beulah, Hazen, Washburn have remained viable and grown largely due to industry activity," Leistritz says. "[The lignite industry] is the difference between a very prosperous community and a continuing downward spiral," Leistritz adds.

North Dakota lignite in 1995

The industry employed about 3,700 people directly, with an annual payroll of over $170 million, and about 16,500 indirectly.

That personal income generated more than $531 million of business activity.

North Dakota received an estimated $66.4 million in tax revenue from companies involved in lignite-related activities.